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In Pictures: The Worst CEO Screw-ups of 2012

Which CEOs did the most abominable jobs managing their companies this year? We have plenty to choose from in 2012.

More than a dozen banks have been caught up in a scandal involving interbank interest rates, including the London interbank offered rate, known as Libor. Though top managers at the banks have tried to distance themselves from charges that they colluded to manipulate rates, there has already been one resignation, at Barclays, and arguably the CEO should always be held accountable. Another bank giant battling Libor allegations, HSBC, also just reached a $1.92 billion settlement of wide-ranging money laundering charges.

Several companies performed really poorly this year and their CEOs deserve blame. That includes Mark Pincus at online game maker Zynga, where the stock price has plunged 75% this year.

At J.C. Penney, Ron Johnson presided over an attempted company makeover while J.C. Penney’s stock dropped from more than $40 in March to less than $20, with a third-quarter loss of $203 million.

Then there is Aubrey McClendon, CEO of Chesapeake Energy in Oklahoma City. His sins make a long list. He took out $1 billion in personal loans secured by his stake in Chesapeake wells, and one of the lenders received favorable terms on investments in the company; he allegedly ran a secret $200 million hedge fund that traded oil and gas; and made shareholders pay for lavish personal perks like plane rides for his family and friends.

There is really too much mismanagement for one story. Instead of trying to be exhaustive, I’ve put together a highlights list of ten CEO screw-ups. I got help from Forbes colleagues and from Sydney Finkelstein, a management professor at Dartmouth’s Tuck School of Business and author of Why Executives Fail, who composes his own annual list of the worst CEOs of 2012. I’ve borrowed liberally from Prof. Finkelstein and also consulted with two professors at Kellogg School of Management, Daniel Diermeier and Harry Kraemer, and with Richard Levick, a Forbes contributor who runs Levick Strategic Communications, a crisis communications firm in Washington, D.C.

Here is our list of ten 2012 CEO screw-ups, in brief and in no particular order. Though we’re calling it the “worst” of the year, we know there are other CEOs out there who may deserve to be included. Please let us know whom we missed.

He borrowed $500 million for personal use from EIG Global Energy Partners, which later received favorable terms on investments in Chesapeake.

He ran a secret $200 million hedge fund trading oil and gas, according to Reuters, another huge conflict of interest.

He made personal trips on company jets, had Chesapeake employees do personal work for him, and had a corporate sponsorship deal with the Oklahoma Thunder while he was owner of the basketball team, yet another conflict of interest.

All of that said, I’ll add that my colleague Christopher Helman, who wrote a cover story on McClendon in October 2011, called “America’s Most Reckless Billionaire,” believes that now that McClendon is no longer chairman, he will get the oversight he needs from the board and possibly do great things for the company. Read Helman’s interesting thoughts here.

2. Brian Dunn, former CEO, Best Buy, resigned in April

Presided over five years of a declining stock price and market share loss to Wal-Mart, Apple, Amazon and other online sellers.

Failed to improve customer service and online offerings.

Sales have fallen as have earnings per share. Cash reserves are down 85%.

Wasted $6.4 billion on share buy-backs.

Resigned as his relationship with a 29-year-old subordinate came to light. Though he and the woman have denied the relationship was sexual, an audit committee found that he gave her tickets to seven concerts and sporting events, and during nine days out of the office on business, he contacted her by cell phone 224 times

3. Andrea Jung, Avon, resigned as CEO at the end of 2011 and as chairman in October

Presided over a long period of poor performance, missing analysts’ estimates. Third quarter earnings were down 81%. Stock has fallen from $30 in May of 2011 to $14.

Failed to groom a successor. In the spring the company brought in Sheri McCoy, formerly a top executive at Johnson & Johnson.

Left the job of chief operating officer open since 2006.

Rejected a $10.7 billion acquisition offer from Coty.

Though Jung hasn’t been accused of any wrongdoing, the company is being investigated for violations of the Foreign Corrupt Practices Act, which bars bribery of foreign officials to get business. The investigation has cost Avon $300 million in legal expenses.

4. Mark Pincus, CEO, Zynga

Stock in Zynga has plummeted since its December 2011 initial public offering, at $10, to just $2.40 a share, as the number of users goes up and the number of paying customers drops.

Top executives have headed for the doors, including CMO Jeff Karp.

Bought online gaming website OMGPOP for almost $200 million and then wrote down the acquisition price by 50% after seven months.

Zynga is almost completely dependent on Facebook for revenues (90%) so that when Facebook changes, Zynga is forced to adapt immediately.

Though he wasn’t Bankia’s CEO, we think his actions as President of the bank make him notorious enough to warrant an entry on our list.

A former finance minister of Spain and Managing Director of the International Monetary Fund (2004-07), he promoted the bank’s health and sold shares to more than 300,000 small investors, most of them bank clients, in an IPO just before the bank was bailed out by the Spanish government.

The bank restated 2011 profits, from €309 million before Rato stepped down to a €3 billion loss after he quit.

Rato and 32 others are now undergoing a criminal fraud investigation by the Spanish government.

6. Ronald Johnson, CEO, J.C. Penney

Former head of Apple’s retail business and former executive at Target was handpicked to turn around J.C. Penney in late 2011 but so far, the company has been losing money and the stock price has slid.

For the third quarter, J.C. Penney lost $203 million, compared to a $186 million third quarter profit a year ago. Same store sales fell by 26%. Online sales fell 37% in the third quarter and the stock is down 50% from the beginning of the year.

Got rid of most promotions and discounts, is in the process of remodeling stores to make them more upscale, introduced a new advertising campaign--all of which haven’t revived the company.

Has tried to equate his attempt to turn around J.C. Penney with Steve Jobs’s efforts to revive Apple a decade ago. He’s comparing apples and oranges.

7. Nancy Brinker, former CEO, Susan G. Komen for the Cure, resigned in August

Brinker was responsible for the breast cancer charity announcing early this year that it would halt funding of breast health programs at Planned Parenthood, supposedly because of a new policy barring grants to organizations under government investigation. (Rep. Cliff Stearns (R-Fla.) had launched a probe into whether Planned Parenthood was using public money to fund abortions.)

Brinker had presided over the hiring of former Georgia Republican gubernatorial candidate Karen Handel, a critic of Planned Parenthood.

8. Michael Hervey, Acting CEO, Long Island Power Authority, resigned in November

According to the New York Times, LIPA was terribly ill-equipped for Hurricane Sandy.

The utility has a track record of failing to prepare for storms, including basic steps like trimming trees that could bring down power lines.

After Sandy hit, LIPA routinely failed to communicate to customers, leaving phones unanswered and customers, literally, in the dark. Service maps were wildly inaccurate and LIPA failed to send out service crews as promised.

New York Governor Andrew Cuomo blasted LIPA for its horrible service record

9. Robert Diamond, CEO, Barclays, resigned in July

Presided over Barclays’ involvement in an international scheme by banks to manipulate interbank lending rates, including the London interbank offered rate, known as Libor, for Barclays’ own benefit

Agreed to pay $450 million to British and American regulators to settle civil charges stemming from the interest rate fixing charges.

Legal authorities are still considering whether to file criminal charges against Barclays and other banks.

At the time of Diamond’s resignation the stock had plunged from a high of $16 in March to a low of $9. (Since longtime insider Antony Jenkins was appointed as the new CEO in late August, the stock has recovered to $17.)

10. Stuart Gulliver, CEO, HSBC

Presided over activities at one of the world’s largest banks that resulted in a record $1.92 billion settlement in December with state and federal authorities over money laundering charges.

HSBC has faced allegations that it transferred billions of dollars for countries like Iran and made it possible for Mexican drug cartels to move money through HSBC’s U.S. subsidiaries. (HSBC has said that it merely had lax compliance standards.)

The settlement raises questions about whether some companies are too big to indict.

HSBC is also a subject of inquiry in the Libor interest rate-rigging investigation.

Please tell us your thoughts about our list. Let us know if you think any of these CEOs don’t deserve to be there, and which other CEOs we should have included.